By Ann Ansley
Carrboro Commons Writer

Dorothy had it right. There really is no place like home.

Especially if you’re required to pay a significant tax if you ever decide to sell your home.

Bronwyn Merritt, a broker with Community Realty, finishes up some work on her laptop before meeting with clients. Merritt opposes the land transfer tax, which will be on the May 6 ballot in Orange County, because she believes it is bad timing to increase taxes for those selling their homes, given the poor state of the real estate market.
Staff photo by Ann Ansley

On the May 6 ballot, Orange County residents will vote in a referendum on whether or not to approve a land transfer tax of 0.4 percent. If passed, residents selling their homes will be required to pay 0.4 percent of the total sale price of their home to the county.

The Orange County Board of Commissions voted Feb. 19 to put the transfer tax on a referendum for the May 6 ballot. The General Assembly voted in 2007 to transfer the burden of acquiring revenue sources from the state level to the county level, so that the counties will now be more responsible for coming up with their own spending money for use within the county, according to the board’s Feb. 19 agenda abstract.

As a result, county boards are required to hold a referendum within their county to see if the public wishes to raise taxes through an increase in the sales tax or an increase in the land transfer tax.

Carrboro residents are hardly at a consensus on the issue.

“I do oppose it, the main reason being that now is the worst sales market and a lot of people are close to foreclosure,” said Bronwyn Merritt, a real estate broker with Community Realty, who lives on Creekview Circle. “Just because you have a nice house doesn’t mean you can afford this tax.”

Merritt says that if people aren’t forced to pay property taxes, they can find better uses for the money they save.

“People usually have plans for that money, not like, go to Hawaii money, you know,” said Merritt.

But others within the Carrboro community believe that the land transfer tax is the most viable option for Orange County.

“If you recognize that services provided have a sales tag, you’re going to have that money when you sell a home as opposed to making those payments throughout the year, as with a sales tax,” said Don Basnight, a broker with Weaver Street Realty, who lives in Durham County but works and rents out three homes in Carrboro.

Basnight argues that when money is generated by a sale, it is easier to pay taxes at that time because you have the money to do so.

Basnight says that the average sale price of a home in Orange County is $280,000. At a 0.4 percent tax rate, the seller will pay a transfer tax of $1,120.

“When are you going to have that amount of money?” he asks. “When you sell something.”

Members of the Carrboro Board of Aldermen also differ on the issue.

“It’s putting too much of the burden on one group of people,” said board member Jacquie Gist. “If we have a legitimate need, we have to decide that we need to share the burden of paying that. If that means a sales tax, then that’s the way to go.”

Interestingly, while the argument may be made that the transfer tax unfairly targets one group of people, those selling their home, others argue that a sales tax would unfairly target a single group of people as well — low-income households.

“I’m in support of it because it’s going to help low-income households and households on fixed income,” said Alderman Dan Coleman. “There are a lot of families who struggle with rising taxes. It’s worthy for that reason alone.”

Board member Randee Haven-O’Donnell agrees with Coleman on the efficacy of enacting the transfer tax.

“I tend to think this is a very sensible way to generate revenue that does not automatically impact everyone,” said Haven-O’Donnell.

She also warned of the potentially negative repercussions if a sales tax were enacted in Orange County.

“By raising the sales tax, we make it less attractive to buy things in Orange County,” said Haven-O’Donnell.

“Orange County is rated one of the best places to live. That’s our greatest commodity and what we want to put a premium on. That’s not going away, so we might as well generate the revenue from what is our greatest commodity.”